On Sun, 14 Dec 2008 18:44:58 -0500, Wes wrote:

F. George McDuffee wrote:

FWIW #2 -- standard Detroit vendor terms are now payment in 45
days after receipt of invoice. This means that the vendor has
*AT LEAST* 15% of their yearly *GROSS* income from that product
at risk, effectively making a zero interest, zero collateral
loan. Blogger information indicates that the payment times have
been gradually increasing above the 45 day standard, leading to
the assumption of a final "bust out scam" on top of the long-term
Ponzi scheme. [Why leave any money on the table?]


Don't forget how tooling and such get held out for PPAP approval and all the other games
to stretch payment. I have a feeling many vendors aging report go at least 60 days.

Wes


Actually, the tooling and part suppliers don't get paid until the tool
produces vehicles for sale. Test shots/parts and pre-production
test-vehicles don't count. In other words, vendor's tooling and
parts made to-date for say the 2010 vehicles won't get paid until at
least September 2009, when the 2010 models go on sale. One of the
little repercussions of this is that if a "model line" is now cut to
reduce the Big3's style offerings, say Chrysler cuts the Grand Caravan
mini-van, the supplier of (again..for instance) the front clip, may
very well have a real problem/no recourse to collect anything. Ever!!
If the tooling for the clip was worth say $200,000 for that one part,
that may well sink the tool builder and the part supplier. That's two
businesses that will be gone, and they probably have had to arrange
similar financing terms and arrangements with either their suppliers
or their bank, or both, to float that money to start with, so they
will also take hits. And what if they made 5 tools for Chrysler, only
2 of which were for the Grand Caravan, on a deal of some sort, and now
they go out of business because they can't get paid for the one part,
so there will be extra troubles for Chrysler because they won't have
supplier for the other parts now.

There must be millions of little unthinkables about to happen, even
WITH any government (US all levels + Canadian Feds & Ontario
provincial) bail-out monies or assistance. I can see a Humpty-Dumpty
tumble-down (not a trickle-down) about to happen no matter what, as
these rules change or are forced upon the industry. Some good and
well run businesses that had no causal interests in this collapse are
going to be hurt severely or killed, no matter what happens now. And
before anybody jumps in with the standard cries of how it's their own
damn fault ..most are skilled non-union, if that influences anything.

Merry Christmas,,,,riiiiggghhhhtttt

Brian Lawson,
Bothwell, Ontario.